With the recent rash of Bank failures, it is clear to see that there will be more financial and economic issues to face in the near future. Commercial Real Estate debt is a topic that has gone unnoticed for some time now, however it is about to rear its head and send shock waves through the economy. Around 70% of the financing to this sector is supplied by local and regional banks. Additionally it is estimated that the commercial sector is running on a 60% to 70% occupancy rate. This will become problematic when $2.5 Trillion are up for refinancing in the next few years especially when interest rates have doubled. We will most likely see and experience a crisis in this sector.

The past Tuesday we received the data from the S&P CoreLogic US Home Price Index for January 2023. The data results stated that home values dropped for the 7 straight month, with many west coast metros showing significant declines. This trend will continue as the year goes on. Of particular note, the co-creator of that Index, Robert Shiller, provided some rather interesting commentary about the current state of the Housing Market. He mentioned that we should "probably wait" to buy a house as prices should be more affordable "in about 6 months". His commentary regarding the state of the Housing Market should be noted. I have found that he rarely speaks about the Housing Market and when he does, he is somewhat ambiguous with what he says. If you read between the lines, he is saying that the Housing Market is not recovering and will only get worse as time goes on. It is clear that he will never call out a Correction, Crash or Crisis publicly, however he does not what is going on...

It has been a while since we have heard anything regarding the status of Rental Payments and Income in the Mainstream News Media. According to a recent article from CNBC, there are more than 5 Million Households that are still behind on their monthly rent. This should come as no surprise considering the financial issues most people are facing these days along with the effect inflation has had on the overall economy and our expenses. This is yet another problem and issue within the Housing Market that has not been addressed and will manifest sometime in the near future resulting in more losses and financial issues for the small (Ma & Pa) Real Estate Investor group.

It was a very interesting weekend with 2 of the nations's largest Banks imploding under the pressure of inadequate liquidity. Americans better heed the wake up call. This will have both short and long term impacts on a very broad economic level. How will the Housing Market fare now? Expect tightened lending guidelines and a drag down in values as the economy adjusts to the chaos.

Real Estate Investment is not without its risks. Even the wealthy are prone to making poor Investment choices. Pop Singer Britney Spears "did it again" by recently selling her Calabasas CA home she owned for approximately 8 months for a whopping $1.7 Million dollar loss. As the Housing Market goes through its correction, and eventual crash, we find that the higher end home market is seeing signs of stress with significantly less sales activity and rapid price depreciation. As we all know, what goes up, must come down and this new Real Estate cycle will show us where the future deals are. Additionally, The FED tossed the Markets a change up and stated that they foresee additional and higher rate increases for 2023.

 People are already stating that the US Housing Market has "bottomed out" and we should be seeing price/value gains. Information from ReFin suggests that certain Metro Markets have recently seen an uptick in viewing activity, along with some isolated bidding wars. Clearly each local market will experience different phenomenon when compared to others and small uptick in various stats that are tough to quantify does not make for an overly improved Housing Market.

We will continue to see the on going debate during 2023 with respect to where the Housing Market is headed. It is clear that there are definite lines that have been drawn in the sand regarding who believes the Housing Market will remain steady or improve, versus those that believe we are now experiencing a Housing Correction and potential Housing Crash. What do you think will happen this year?

 As we enter into 2023, we are fully aware that the Housing Market is experiencing a correction. Queue the Foreclosures, that should push the Housing Market into Crash territory. The volume and impact of the next Foreclosure waves have been downplayed by the Media and other Real Estate and Mortgage related players as they continue to control the Housing Narrative and manipulate the Housing Market. How do you think it will all play out? Will the backlog and volume of Foreclosures have a significant impact on our Market?

CA AffordabilityCalifornia is one of the most expensive states to live in. In fact, many people are migrating out of the state due to the high cost of living. Property prices, property taxes and rental rates are rank among the highest in the nation.